A culture of cronyism at the BBC led to millions of pounds in excessive severance payments being paid to senior managers, an influential committee of MPs has found.
One-hundred-and-fifty senior managers received a total of £25 million in pay-offs with some receiving "sweeteners" that went well beyond what they were contractually entitled to.
In 22 cases the corporation paid more salary in lieu of notice than it was obliged to, at a cost of £1.4 million, the public accounts committee found.
"There was evidently a failure at the highest levels of the BBC to challenge payments to senior managers and what appears to have been a culture of cronyism that allowed for the liberal use of licence fee payers’ money," committee chair Margaret Hodge said today.
"Both the BBC executive and the trust have let down licence fee payers by allowing this culture to develop."
Former BBC director general Mark Thompson told MPs it was necessary to pay his former deputy and long-term colleague Mark Byford an extra £300,000 in order to keep him "fully focused" on the job instead of "taking calls from head hunters".
Byford received over a million pounds in severance payments in 2011.
The committee said they "remain concerned" that they were misled by the corporation during their investigations.
"The unedifying spectacle of witnesses from the BBC Executive and the BBC Trust disputing each other’s evidence on severance pay revealed a serious breakdown in governance, record-keeping and accountability," they said.
Speaking on the Today programme, Hodge said the culture of cronyism at the BBC had been allowed to develop over many years.
"There was in my view a culture where people at the top of the BBC had known each other for years and years and probably come in as graduate trainees together and it seemed right that they should look after each other when they lost their job by giving out lots and lots of public money in unacceptable high pay offs."
She welcomed the decision by current director general Lord Hall to cap severance payments at £150,000 but said the BBC Trust needed to do more to scrutinise the use of licence fee payers' money in future.
Mark Thompson today vigorously defended the pay-offs, telling the BBC that: "Despite some inflammatory language in the PAC report, there is absolutely no evidence of any wrongdoing by anyone at the BBC in relation to these severance payments."
A BBC Trust spokesperson said: "We greatly regret that licence fee payers were let down by this episode. They are entitled to expect that their money is spent wisely. Since 2009, the trust has worked successfully with the executive to drive down senior manager pay.
"We have already announced measures that address the committee's call for more rigorous scrutiny of the BBC's performance and clarify the charter's requirement that the BBC executive manages the BBC while the trust represents the licence fee payer."